19 Jan Carpooling startup Ryde gears up for Series A, expansion
- In wake of US$1-mil seed round in November, looking at HK with Series A
- Claims has 20K members in its network, makes ‘thousands’ of monthly matches
SINGAPORE-based carpooling startup Ryde Technologies is aiming to enter the Hong Kong market by the second quarter of 2016, and also plans to raise a Series A round to fuel its expansion.
These plans come in the wake of the S$1.5-million (approximately US$1-million) seed round it announced in November 2015.
In a recent media briefing outlining his plans, Ryde founder and chief executive officer Terence Zou (pic above) remained tight-lipped about how much it is trying to raise, but claimed the company now has 20,000 members in its network, a 100% growth in two months.
“As of last month, we have made thousands of matches, and this month we are on track to do better,” he said, adding that this shows how Singaporeans are more willing to carpool than generally perceived.
Owning a car is expensive in the city-state, where half the sticker price of a car comes from the Certificate of Entitlement (COE), a quota licence which grants the holder the legal right to register, own, and use a vehicle for a period of 10 years.
Ryde has also benefited from a new carpooling law which has given some structure to how fares are calculated. Drivers are only allowed to defray costs and expenses for a ride, and can make only two trips a day.
While many may advocate the use of public transport to reduce pollution and alleviate congestion during peak traffic periods, the likelihood of the world going car-free is slim, Zou argued.
“Cars play a very critical role, they aren’t going away anytime – whether in America or Singapore, we all love our cars,” he said.
“I think now it is about how we use it in a more sustainable way, and that’s where we come in,” he added.
But there are challenges in promoting carpooling in Singapore too, with Zou suggesting that these were poor exchange of information and a lack of mutual trust.
“At 5pm, when you knock off work, there is definitely someone around who is going in the same direction who would be willing to offer you a ride.
“If that information can get to you or vice versa, then that exchange will definitely happen,” he said.
“The second thing is lack of mutual trust – if you understand that we are in the space of the sharing economy, but in order to share there must be trust.
“If there is no trust, then we won’t share,” he added. “Humans are fundamentally good – it is innate in us to share, just within the right circumstances and place, and with enough trust.”
Ryde’s business model is a yearly subscription model where members pay S$30 for unlimited matches.
The startup has a proprietary algorithm to match passengers and drivers who are heading in the same direction.
“The key thing is information flow – it is a methodological approach to solving this problem,” Zou said.
“The fares are calculated in the backend in [line] with the LTA’s (Land Transport Authority) instructions that it should not be for profit,” he added.
Passengers pay the drivers directly with no involvement from Ryde. The community is also tasked with policing themselves, with both drivers and passengers rating each other after a ride.
The startup requires an average rating of four out of five stars to continue using the service, and members’ whose average ratings drop below this will be suspended for a month.
Three stars is “the industry standard, and we need to set a higher benchmark so that everyone averages up rather than averages down,” Zou declared.
He said Ryde is not afraid of swinging the ban hammer against members who display undesirable behaviour.
“We are infamous for banning people with undesired behaviour in our network, and I make no apologies for it – if there is bad behaviour, we immediately give them a call,” he added.
Maintaining a four-star average is not as difficult as it might sound, according to Zou, who claimed the majority of the Ryde network has no difficulty maintaining this.
“Maybe you have a bad day and you get three stars, but generally, 98% to 99% of the carpool rides are successful and without problems.
“And if there are any problems, it is usually with their first time in using the service – but once they get the hang of it, there usually isn’t any problem.
“For bad behaviour, we do take immediate action to call them and find out [what happened], and usually it is a case of miscommunication between the driver and passenger,” he added.
The hit rate for on-demand requests have been hovering around the 50% to 60% mark, according to Zou.
“Obviously, as more and more people come in, our rates will go up, just like in any network.
“We are confident that our rates and number of matches will go up,” he said.
Currently, both drivers and passengers are required to submit photo IDs, with drivers needing to submit documentation for their cars too.
“Right now, we only check with the LTA to ensure that they are the owners of the car,” Zou said. “We rely on the reviews to check on drivers, and are continually fine-tuning our system.”